Hendy Group Ltd v Mr D Kennedy

Hendy Group Ltd v Mr D Kennedy [2024] EAT 106

Case Principle

The case reinforces the principle that an employer has a positive obligation to seek and properly consider alternative employment for an employee facing redundancy, going beyond merely signposting available positions. The Employment Tribunal must assess whether the employer acted reasonably in treating redundancy as a sufficient reason for dismissal, considering the employer's size and resources, and applying the "range of reasonable responses" test, rather than substituting its own view. A failure to adequately consider alternative employment can render an otherwise genuine redundancy dismissal unfair. The judgment also clarifies that when assessing compensation, if the procedural unfairness (e.g., blocking alternative employment) is found to be the reason the employee did not secure another role, a Polkey reduction (to reflect the chance of dismissal even with a fair process) may not be appropriate.

Facts

Parties: Hendy Group Ltd (the Appellant employer) appealed against a decision in favour of Mr Daniel Kennedy (the Respondent employee).

Claimant's Background: Mr Kennedy had 30 years' experience in the motor trade, specifically in sales, and had worked for Hendy Group since 2013. Since 2015, he was employed as a trainer in the Respondent's Training Academy, a role he enjoyed due to its set hours.

Redundancy Situation: In 2020, a genuine redundancy situation arose, largely due to the COVID-19 pandemic. Mr Kennedy accepted that a redundancy situation existed and that he was fairly selected for redundancy within his team.

Claimant's Complaint: His complaint was that he was unfairly dismissed because the Respondent employer failed to give adequate, appropriate, or fair consideration to the possibility of him continuing to work for the Respondent in a different role.

• Employer's Actions Regarding Alternative Employment:

  • During a consultation meeting on 4 September 2020, the Claimant was told he could apply for posts on the Respondent's intranet, on the same basis as any other applicant.

  • The Human Resources Department took "no step whatever to assist Mr Kennedy" and offered no assistance, suggesting no posts, and providing no help beyond his line manager offering to speak to anyone who wanted to phone him.

  • After being told he was to be dismissed in late September 2020, Mr Kennedy was required to return his laptop, losing access to internal email and the intranet. He then had only the same job access as the public.

  • Multiple sales jobs were available within the Respondent between Mr Kennedy being given notice and his dismissal (a 7-week period ending 9 November 2020).

  • Mr Kennedy proactively applied for several roles, including sales manager positions at Bournemouth Toyota, Chandlers Ford Renault, Salisbury Toyota, and a sales advisor role at Christchurch Jaguar Land Rover.

  • He was interviewed for one sales manager role, but the interviewers had concerns about his motivation for a sales role (perceived as simply wanting to remain employed), his desire to lead a team, and his commute. Another existing employee (not at risk of redundancy) was appointed.

  • The Judge found a lack of any proactive assistance from the Respondent's management or HR in helping Mr Kennedy find alternative roles. His line manager stated he couldn't assist outside his department, but the Judge found someone else (e.g., HR or a senior manager) should have.

  • A critical email, sent by HR on 3 November 2020 to his internal email (inaccessible since late September), was received on his last day of employment (9 November 2020). This email informed him that his applications for Sales Manager roles at Eastleigh Renault and Salisbury Toyota would not be progressed. It stated that based on a previous interview, there were "questions around your motivations for applying for a Sales role," and that "the response will be consistent for other Sales related roles," effectively blocking him from future sales roles. The Judge found this email "hard to imagine anything less helpful".

  • The Judge observed that the Respondent's premise that "someone so good that he trains sales managers is not able to do the job he is training others to do" was "fundamentally unsound".

• Claimant's Mitigation: Mr Kennedy made extensive efforts to find work, starting a new job as a "Customer Experience Team Leader" with an online car sales company on 24 May 2021, approximately 7.5 months after his dismissal. The Judge found he had fully mitigated his loss.

Held

• The EAT dismissed Hendy Group's appeal, upholding the Employment Tribunal's decision.

• The EAT found that the Employment Tribunal did not err in concluding that Mr Kennedy's dismissal for redundancy was unfair because the employer had failed to consider alternative employment.

• The EAT affirmed that the Judge, despite some unusual phrasing, had the correct legal test in mind (fairness under Section 98(4) of the Employment Rights Act 1996).

• The EAT concluded that the Judge's findings of fact regarding the Claimant's suitability for other roles and the employer's conduct did not amount to impermissible substitution of the Tribunal's view for the employer's. Instead, these findings were relevant to the question of remedy, particularly the Polkey assessment.

• Regarding the Polkey reduction, the EAT agreed with the Tribunal that no reduction should be made. The Judge's conclusion that the reason Mr Kennedy did not get another job within the Respondent was the employer's "very failure" to properly consider alternative employment and actively blocking his applications was upheld. The EAT reasoned that if the Claimant had not been unfairly blocked, he would have secured alternative work.

Comment

This case starkly illustrates the active duty of employers to genuinely explore and facilitate alternative employment options for employees at risk of redundancy, especially within large organisations with available resources. It highlights that simply directing an employee to a public job board, without proactive assistance, proper internal communication, or meaningful consideration, is insufficient to meet the legal obligation of a reasonable employer. The judgment underscores that assumptions about an employee's motivation or past preferences are not sufficient to justify a lack of effort in finding alternative roles, especially when the employee is actively seeking to remain employed. Furthermore, the EAT's upholding of the full compensation award (no Polkey reduction) serves as a clear warning that if an employer's procedural failings directly prevent an employee from securing an available internal role, the employer will bear the full financial consequences of the unfair dismissal.